Good Investing Is BORING

Dear Reader,

Every so often, I’m reminded of a conversation between Bill Gates and Warren Buffett. Years back, Gates was asking Buffett about how he became a billionaire. And Buffett explained his investment strategy in only a few sentences. Gates was shocked with how simple it all seemed. He asked why, if investing is so easy, everyone isn’t rich. And Buffett’s response might have shocked him even more. The Oracle of Omaha said that everyone wasn’t doing it because nobody wants to get rich slowly. But that’s exactly how the super-wealthy get there. Because, as another billionaire, George Soros, once said, “Good investing is boring.”

But day-trading sounds exciting. Imagine buying a stock in the morning and selling it later that afternoon to become super-wealthy. It sounds great, right? Incredibly exciting. But most traders lose money. It’s a statistical fact. Exciting investing is not good investing. Good investing is boring. The exciting part is when you check back in a decade or so and realize you’re rich.

Buffett Knows Best: Good Investing Is Boring

I’m going to stick with my Warren Buffett example for now, but I’ve got a personal story to share to drive the point home, too. And I’ll get to that in a bit. But first, let’s talk about Buffett’s vast wealth and see how quickly he accumulated it…

Because Warren Buffett accumulated 99% of his net worth after turning 50. Despite being a successful investor for decades before that, Buffett didn’t become a billionaire until he was 56.

But when he was a young man in his 20s, he was still a relatively small fish. His net worth at 21 was a mere $20,000. But thanks to his patience and determination, by 26, he was worth $140,000.

Four years later, he’d become a millionaire at the age of 30. By his mid-40s, Buffett had a net worth of $19 million, which seems large but pales in comparison to his current $142.6 BILLION. But he stuck with his strategy for building wealth over time, and in about another decade, he became a billionaire.

Warren Buffett is known as one of the greatest investors in the history of the world. And it took him 30 years of hard work to become a billionaire. That’s certainly not overnight success, in my book. Warren Buffett got rich slowly. But boy, did he ever get rich.

And the story is true for most super-wealthy individuals. The average age for billionaires is between 50 and 70. But more than 40% of the world’s super-wealthy are over 70. That data alone shows that exciting investing isn’t how you get rich. A lifetime of boring investments is what will really get you there.

Good Investing Is Boring, and I’ll Show You Why

But you don’t have to be a billionaire to show that boring investing is how you make lots of money. In fact, I’ve got a very personal example to drive the point home today. Good investing is boring and it’s working really well for me…

You see, the other day, my wife and I were going over our finances. We’re getting really close to paying off our house and I’ve got a private investment that’s about to go public that should put us over the top. I bought the shares over three years ago and my money’s been in limbo ever since.

It’s been the exact opposite of exciting waiting for the company to list its shares. And three years is a long time to wait, for most of us. But what is exciting is knowing that my patience is about to be rewarded as the shares list and my profits become real.

But that’s not the example I wanted to share with you. It’s just part of it. Because, while that investment is going to add a bit to our net worth, it’s a very small chunk of our investing profits. And most of those have come even slower…

Back in 2019, Nvidia shares had taken a pretty hard hit and were trading at a split-adjusted $3 or so. But everyone I talked to in the IT world was using Nvidia chips for everything. So I picked up some shares. And they did absolutely nothing for a while.

Then they ran up on crypto enthusiasm. Then they crashed. And I bought more at a split-adjusted $15. I always tell people to keep buying until the investment thesis really changes, and mine didn’t: Nvidia always makes the best chips for the next best thing.

That addition was back in 2022 when markets were crashing. And Nvidia shares fell even farther that year. But fast-forward to today and those shares are now trading hands for $130 each. Now I’m looking at a several-thousand-percent gain on my overall position. But it didn’t happen overnight. It took five years to play out.

But again, that’s not the example. The example is the total account value. And how much it’s grown since the last time the wife and I sat down to go over it. She was shocked because she doesn’t look at it every day like I do. So to her, it seemed like it happened overnight.

But it didn’t. We’ve been steadily contributing to those accounts for a long time now. And we’ve been investing in boring things like dividend-paying stocks, real estate, energy, and gold. Of course we’ve got that tech allocation through Nvidia. But most of our funds are in what you’d call boring stuff. And any income those investments bring gets reinvested to take advantage of compounding.

But it’s that boring stuff that really makes you rich when you just leave it alone for a while. Let it be boring. Let it grow. Let it compound. That’s what Buffett does. And that’s what I did too. Back when I first started my Roth IRA, I only had $5,500 in it as that was the maximum one-year contribution back then. Now I’m set up for an early retirement if I decide to take it.

It didn’t happen overnight. It was incredibly boring to watch. But I’m sure excited by the results.

So good investing can be exciting when you get to your destination. But good investing is boring while you’re taking the trip to riches.

The Bottom Line

The bottom line here is that good investing is boring. But big profits are exciting. And good investing leads to big profits. So it’s time you get excited about boring investments. In fact, it’s past time for that. And I’ve been imploring you for years to do it.

My whole career, I’ve been singing the praises of dividend-paying companies that grow their payouts over time. Those are the kinds of companies that let you take advantage of compounding just like Mr. Buffett and me.

More recently, back in 2021, I started pounding the table about inflation and slowing growth. I practically begged investors to get allocated to gold, energy, real estate, and infrastructure investments. Boring investments that have been outperforming the market ever since.

And I’m still here saying the exact same thing… Good investing is boring investing. But getting rich is VERY exciting, even when it happens slowly.